Mirvac Group's 664 Collins Street. (Photo: Mirvac Group)

Australia’s Mirvac Group has entered into agreement to sell a 50% stake in 664 Collins Street in Melbourne for AUD138 million (USD105 million).

The stake is being sold to an investment vehicle sponsored by Morgan Stanley Real Estate Investing (MSREI), with a capitalisation rate of 4.97% given the acquisition consideration.

As part of the transaction, MSREI will fund 50% of the total development costs throughout the construction period, and provide development management, and investment management services for the property.

Mirvac will, on its part of the transaction, provide a five-year rental guarantee on any unlet office or retail space from the date of practical completion.

“Mirvac has a strong history of attracting top-tier capital partners at its assets, and today’s transaction further demonstrates our superior development and asset management capability”, said the REIT’s CEO and managing director, Susan Lloyd-Hurwitz.

Upon completion, 664 Collins Street will provide 26,000 square metres of office space across nine levels.

The Grade A property is 62% pre-leased to tenants that include Pitcher Partners, which has pre-committed to over 9,000 square metres, and ExxonMobil which has pre-committed to 7,100 square metres.

The property is expected to be completed in 2018.

Units of Mirvac Group are currently listed on the Australian Securities Exchange (ASX) at AUD2.27.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.